Jobs, jobs, jobs. Are LEPs getting the job done?

The Files’ chief blogger, Paul Dale, sets the scene for our focus on LEPs this week. He returns to the heady days of summer 2010 as RDAs began to dissolve and new Partnerships were formed. It’s too soon to judge success, he says, but GBSLEP may have to be more ambitious about jobs targets if the area is to keep up; more businesses need to be convinced and Government has yet to prove it is really serious about localism.

It wasn’t much commented upon, but an interesting aspect to the 2010 General Election was the way in which both Labour and the Conservatives approached the campaign with a bit of a downer on regional development agencies.

Regardless of the fact that in the five preceding years they had pumped £11 billion of aid into local economies, Labour hinted that it might reform the RDAs, while the Conservatives went further by stating that they would abolish the institutions which they regarded as a waste of money.

The need to reduce the national debt, combined with the global financial crisis and a severe downturn in opportunities for economic development, were cited as reasons to dispense with the development agencies.

The new Conservative-Liberal Democrat coalition moved quickly to change the regeneration landscape by axing Advantage West Midlands and the eight other RDAs at the end of March 2012 and by doing so saving up to £2.3 billion a year, Communities Secretary Eric Pickles promised.

In their place were to be far smaller institutions called Local Enterprise Partnerships – an amalgam of business interests and local councillors. Crucially, the LEPs would have a majority of unelected business representatives on their boards, effectively removing political control from town halls.

The idea, apparently, was that private sector know-how and the enthusiasm of businessmen and women at a local level would drive the LEPs forward, free from the red tape of the RDAs.

The LEPs, the coalition claimed, would mark the beginning of a transfer of powers from Whitehall to the great cities and English regions. Put simply, the LEPs would be the shock troops of localism.

In a parting shot, the RDAs published research by PriceWaterhouseCoopers showing that development agencies had given value for money by generating £1 for the local economy for every £1 of public money spent. This figure was estimated to rise to £4.50 for every £1 spent when long-term investments in infrastructure matured.

It soon became apparent that Ministers had given little thought to what the LEPs would do, how they would emerge, and how they would be funded. It quickly became clear that the LEPs would not be given budgets, other than what turned out to be an inadequate amount of money to cover administration.

Nor had much consideration been given to the areas to be covered by LEPs, other than that they should ideally reflect “natural economic geographies”. It was up to cities, towns and regions to come up with their own ideas for LEPs, which might or might not be approved by Whitehall. Unsurprisingly, there was a bit of a territorial tussle with prospective LEPs springing up here, there and everywhere before, finally, 39 such organisations were approved across England.

An attempt to follow Government advice about reflecting natural economic geographies by forming a LEP broadly covering the West Midlands metropolitan area failed when it became clear that the Black Country councils and Coventry and Warwickshire could not be convinced of the case for working with Birmingham.

Birmingham City Council, then under the control of a Conservative-Liberal Democrat coalition, engaged in a dogged struggle to sign up sympathetic councils to form a LEP.

The result of this, the Greater Birmingham and Solihull LEP, brought together a curious mix of urban and rural councils, namely: Birmingham, Solihull, Tamworth, Lichfield, East Staffordshire, Cannock Chase, Redditch, Bromsgrove and Wyre Forest.

Dr Cable said: “We’re investing heavily at a local and city level to reverse years of terrible over-centralisation in London that has led to a lack of independence for cities.

“Getting rid of the RDAs and bringing in LEPs has perhaps been a little Maoist and chaotic, but overall we’re giving back to councils and local authorities the powers and incentives they need to see a resurgence in civic pride.”

Before his Lunar Society speech Cable had told the Commons Business Select Committee that LEPs wouldn’t get any Government funding and would have to rely on raising cash from councils and other institutions.

It couldn’t go on in such a fashion, of course. Gradually the Government began to get a grip on LEPs and started to redefine their purpose, thanks largely to the efforts of Tory grandee Lord Michael Heseltine who was asked by the Prime Minister to make the case for the transfer of powers and budgets from Whitehall to the regions.

Heseltine, the arch-interventionist of the 1980s, did so with gusto, and his No Stone Unturned report recommended transferring £60 billion from Whitehall and Europe in the form of a single pot to LEPs, who would bid competitively for the money.

He moved into GBSLEP’s Baskerville House headquarters in Birmingham with a team of civil servants to produce a study setting out how his localism initiative would work in practice. The Greater Birmingham project identified a number of opportunities that might arise from a single pot including the expansion of Birmingham Airport, the development of UK Central, formerly the M42 Economic Gateway, and the acceleration of digital connectivity.

The Government accepted Lord Heseltine’s ideas, but reduced the pot, or Local Growth Fund as it became known, to a rather conservative £10 billion over five years.

GBSLEP is in the process of compiling a bid to the Local Growth Fund and will consult on its draft Strategic Economic Plan. It has published a strategy for job creation and economic growth with the following targets:

A net increase of at least 100,000 private sector jobs by 2020

A net increase of at least £8.25 billion GVA by 2020

A decrease in unemployment across the LEP to fall in line with at least the national average by 2020

An increase in GVA per-head across the LEP to meet the national average by 2020 and exceed the national average by 2025

An increase in the percentage of the working-age population with NVQ3+ to be above the Core City LEP average by 2020 and out-perform the national average by 2025.

It is certainly too soon for a debate about the successes, or otherwise, of LEPs, although it has to be said there is little evidence yet that Vince Cable’s pledge to “give back to councils and local authorities the powers and incentives they need to see a resurgence in civic pride” is anywhere close to being fulfilled.

And while Lord Heseltine undoubtedly talks a good game on the localism front, an analysis of what is actually happening at the sharp end demonstrates the mountain that LEPs must climb.

Private sector jobs grew by 2.2 per cent in Birmingham between 2010 and 2012, compared with a 5.7 per cent increase in London. Unemployment in the West Midlands and Birmingham remains far higher than the national average.

An extra 112,300 residents would have to find work in Birmingham to bring the city up to the national average for the number of people employed. GBSLEP’s target to create 100,000 jobs across the entire LEP area by 2020 must be seen in this context.

Some 35.7 per cent of businesses thought LEPs have not had much of an impact while 46.4 per cent said they haven’t seen enough of what they do to form an opinion.

Only 17.9 per cent suggested they have had a positive economic impact on the West Midlands.

Regional development agencies became whipping boys for the media and local councils, with the RDAs routinely presented as weighed down by red tape and next to useless. Such a claim was never remotely fair, but it stuck.

LEPs must up their game and prove they can make a difference, but the Government must show that it is serious about localism as well if the Local Enterprise Partnerships are to deliver regeneration and create jobs at a faster pace than the RDAs.